Andrew Dickens: Is the Government counting its chickens before they hatch?

Let's start with the big story of the day: the Finance Minister yesterday unveiling a major plan to shrink the public service. It's putting thousands of jobs on the line, but it is booking, potentially, billion-dollar savings into this year's Budget. So the interesting thing about her announcement —there were precursors to this, so this is stuff we knew, but it's all brought it into focus— is the pure numbers that we're talking about. 

So the Government wants to reduce the size of the core public sector. At the moment it's at 1.2% of the population. 1.2% of working New Zealanders work for the Government – they want to bring that down to 1%. So as we learned the other day, New Zealand's population sits at around 5.3 million. That, if you do the maths, means about 6–8,000 roles should go. The actual number they mentioned though was closer to 9,000. The savings will come from trimming staff numbers. They want to merge departments, and they want to increase the use of AI to improve efficiency.  

Now, of course some of us had thought that the cull of the public servants had already started. Wellington's economic stagnation has been blamed on that first round of efficiency cull, but it appears that not much was achieved. And here again, the numbers tell the real story. Back in 2017 there were 48,000 public servants. This ballooned under the Labour Government to 63,000. But despite all the angst in Wellington about bureaucratic redundancies over the past two years, the fact is there has not been a dramatic reduction in head count. In 2023, there were 63,000 public servants in this country. Today, in 2026, there are still 63,000 public servants.  

It's a dynamic world, the world of business and employment, and it's a bit like whack-a-mole. You cut here, but then you have to increase the cohort there every time you launch a new programme. If David Seymour gets his immigration policy over the line and we're going to crack down on overstayers more, they're going to need a whole lot more immigration workers – but they just fired a whole lot of those. Our search for 500 extra police officers was proof of how difficult all this can be. As fast as we hire a new cop, an old cop quits. So, we're running as fast as we can to stand still.  

These 63,000 people in the core public service, guess how much they cost the country? Guess how much? $11 billion a year. On average, and wait for this, each role costs about $175,000. I know. Well actually, the average wage is more like $100,000, but there's a whole lot of guys who are paid a whole heap more, so that brings that up a bit. Also it's the cost of disestablishing the role. But anyway, the fact of the matter is reducing those numbers will save hundreds of millions of dollars annually and potentially billions of dollars over the Government's four-year forecast period. 

Here's the thing, it's forecast over four years and even though these job cuts won't happen immediately, the Government plans to count these savings in this year's Budget, which is a week away. Based on the firm target that they're going to reduce head count by 9,000. So they're already talking about it. They're already saying before they've done a thing, hey, we've got an extra $2.4 billion and we'll be able to buy more services with that. And they're going to be doing that this election campaign; they'll be doing it next week over the course of the Budget. That's a very pretty $2.4 billion, isn't it? It sounds really good, but it'll take four years to achieve it if they achieve it. And I would ask you, is that counting your chickens before they hatch? 

So the process is easy to say, but I think you'll find it's much harder to do. And if you lay down an arbitrary target, we're cutting 9,000 jobs, that doesn't necessarily mean that the target will be met or met appropriately. So look, it's your show. What do you have to say about it? Are you confident that this can be done? Are you confident that this can be done and our services won't be unnecessarily reduced? 

There's another little debate we can have about the cut to the public service right now and that's the political fallout. This is an election year. Now many on the right will congratulate the move, and indeed they already have. And indeed, they're already asking why did this not happen two years ago? We thought the cull had started. I think the number you'll find that they've done is around about 2,000. Now they're talking about 9,000. Why didn't they talk about 9,000 two years ago? But anyway, the right will say great, good job, we need this. How will swinging voters feel about a cull? It's hard times and suddenly neighbours, family, friends are losing their job. 

And remember with every job cut, the ripples spread out, affecting the private economy. There's an old rule that says every job lost affects three more down the e

Episode Transcript

Speaker 1 (00:06):
You're listening to the carry wood of morning's podcast from
News Talks.

Speaker 2 (00:10):
He'd be let's start with the big story of the day.
The Finance minister yesterday, I'm veiling a major plan to
shrink the public service. It's putting thousands of jobs on
the line, but it is booking potentially billion dollar savings
into this year's budget. So the interesting thing about her announcement,
which was there were precursors to this, so this is

(00:32):
stuff we knew, but it's all brought it into focus.
The interesting thing about it is the pure numbers that
we're talking about. So the government wants to reduce the
size of the core public sector. At the moment that
it's at one point two percent of the population, so
one point two percent of working New Zealand is work
for the government. They want to bring that down to

(00:53):
one percent. So, as we learned the other day, New
Zealand's population sits at around five point three million, that,
if you do the maths, means about six to eight
thousand rolls should go. The actual number they mentioned though,
was closer to nine thousand, nine thousand jobs, and the
savings will come from trimming staff numbers. They want to

(01:14):
merge departments. We'll talk about that again later. And they
want to increase the use of AI to improve efficiency. Now,
of course, some of us have thought that the cull
of the public servants had already started. Wellington's economic stagnation
has been blamed on that first round of efficiency cul
but it appears that not much was achieved. And here

(01:35):
again the numbers tell the real story. Back in twenty
seventeen there were forty eight thousand public servants. This ballooned
under the Labor government to sixty three thousand. But despite
all the yankst and Wellington about bureaucratic redundancies over the
past two years, the fact is there has not been

(01:56):
a dramatic reduction and hit count. So in twenty twenty
three there were sixty three thousand public servants in this country.
Today twenty twenty six, there are still sixty three thousand
public servants. You know, it's a dynamic world, the world
of business and employment, and it's a bit like whack
a mole. You cut here, but then you have to
increase the cohort there every time you launch a new program.

(02:19):
They're going to need. If David Seymour gets his immigration
policy over the line, and we're going to crack down
on overstayers more. They're going to need a whole lot
more immigration workers, but they just find a whole lot
of those. Our search for five hundred extra police officers
was proof of how difficult all this can be. As
fast as we hire a new cop, an old cop quits,

(02:41):
so you know, we're running as fast as we can
to stand still. So anyway, these sixty three thousand people
in the core public service, guess how much they cost
the country? You and I, because we pay the wages,
guess how much eleven billion dollars a year on average,

(03:04):
And wait for this, each role costs about one hundred
and seventy five thousand dollars. I know, well, actually the
average wage is more like one hundred thousand, but there's
a whole lot of guys who have paid a whole
heap more, so that brings that up a bit. And
also it's the cost of disestablishing the role. But anyway,
the fact of the matter is reducing those numbers will

(03:27):
save hundreds of millions of dollars annually and potentially billion
dollars over the government's four year forecast period. But here's
the thing. It's forecasts over four years, and even though
these job cuts won't happen immediately, the government plans to
count these savings in this year's budget, which is a

(03:48):
week away, based on the firm target that they're going
to reduce headcount by nine thousand. So they're already talking
about it. They're already saying before they've done a thing, Hey,
we've got an extra two point four billion dollars and
we'll be able to buy more services with that. And
they're going to be doing that this election campaign. They'll

(04:08):
be doing it next week over the course of the budget.
That's a very pretty two point four billion dollars, isn't it.
It sounds really good, But it'll take four years to
achieve it if they achieve it, And I would ask you,
is that counting your chickens before they hatch? So the
process is easy to say, but I think you'll find

(04:31):
it's much harder to do. And if you lay down
an arbitrary target we're cutting nine thousand jobs, that doesn't
necessarily mean that the target will be met or met appropriately.
So look, it's your show. What do you have to
say about it? Are you confident that this can be done?
Are you confident that this can be done and our
services won't be unnecessarily reduced. There's another little debate we

(04:57):
can have about the cut to the public service right now,
and that's that political fallout. This is an election year. Now,
many on the right will congratulate the move, and indeed
they already have, and indeed they're already asking why did
this not happen two years ago we thought the cull
had started. I think the number you'll find that they've
done is round about two thousand. Now they're talking about

(05:18):
nine thousand. Why didn't they talk about nine thousand two
years ago? But anyway, the right will say, great, good job,
we need this. How will swing of voters feel about
a cull. It's hard times and suddenly neighbors, family friends
losing their job. And remember, with every job cut, the

(05:39):
ripples spread out affecting the private economy. There's an old
rule that says every job lost affects three more down
the economic chain. So if we've got nine thousand jobs
cut over the next four years, you know we've got
nearly forty thousand other jobs that will be economically affected.
So the political fallout will this just harden the dislike

(06:01):
for the coalition amongst swinging voters who chop change, and
of course the left, will they detest it immediately, don't they?

Speaker 1 (06:10):
Eh?

Speaker 2 (06:12):
They just hate this stuff. So the question politically, in
doing this and doing it hard, and doing it like
this and doing it with such fanfare, is the government
shooting itself in the foot? Or will they be rewarded
for finally stepping up their game.

Speaker 1 (06:27):
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